How to set up Insurance and Re-Insurance Business in Nigeria

It is 2021, and a lot of us have established goals on what we want to achieve this year, one of such goal could be setting up an Insurance or Re-Insurance business. If you are planning to set up an Insurance business in Nigeria, then there are some things you need to know.

First on the list is that you need to know the agency know as NAICOM. The National Insurance Commission (NAICOM)  was established in 1997 by the National Insurance Commission Act 1997 with responsibility for ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties to insurance contracts.

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All new insurance companies that seek to do business in Nigeria must be registered with NAICOM, and the process of setting up such a company passes through four stages.

Stage 1: Preliminary Stage

a) Submission of Letter of Intent from the Promoter(s).

b) Request the Promoter( s) to provide the following:

1. Profile of the Directors/current CV of the proposed CEO stating minimum qualification in accordance with Section 31 of Insurance Regulation 2003.
2. A Sworn Declaration of Non-Disqualification of the proposed Directors in accordance with Section 2(1) of the Insurance Act 2003 shall be submitted.
3. Proposed Company name.
4. Draft Memorandum and Articles of Association (MemArt) of the Proposed Company.
5. Evidence of Financial Soundness of the Shareholders supported by Sworn Affidavit confirming such.
6. Evidence of Confirmation (Clean Bill of Health) from the Primary Regulator and Approval to the Promoter/Joint Venture Partners by the Regulator (where necessary).
7. Holding Company Structure and Funding – if Company is a Part of Holding Company.
8. The Class of Insurance (whether General, Life and/or Reinsurance Insurance Business) to be transacted. The Class of Insurance will determine the paid-up capital required for the business.

c) Invitation Letter to the Promoters for Pre-qualification Interview.

Stage 2: Application Stage

a) Submission of Completed Registration Application Form along with the following:

1. Certificate of Incorporation of a Limited Liability Company.
2. Certified True Copy of the Memorandum and Articles of Association of the Company.
3. Final Memorandum of Articles of Association.
4. Particulars of Directors (Form CO7).
5. Allotment of Shares (Form C02)
6. Situation of Registered Office (Form C06)
7. 5-Year Business Plan and Feasibility Study on the proposed Class of Business and Target Market which shall contain the following as a minimum:
   1. Background of the Company.
   2. Organizational Structure of the Company.
   3. Vision, Mission and Objectives of the Company.
   4. A Description of the Proposed Geographical
   5. Area(s) of Operation
8. Information Technology (IT) Tools and its relevance to the business.
9. Underwriting and Marketing Procedures and Processes
10. Investment, Accounting, Management Information System (MIS) Reporting etc.
11. Complaint and Grievance Management Systems and Procedures.
12. Evidence of Payment of Non-refundable Application Fee.
13. Issuance of Letter of Authorisation to CBN on Statutory Deposit.

Stage 3: Verification Stage

1. Evidence of compliance with Minimum Paid-Up Capital Requirements: N10.0 Billion (General), N8.0 Billion (Life), N18.0 Billion (Composite), N20.0 Billion (Reinsurance)
2. Evidence of Minimum Deposit with the Central Bank of Nigeria (Le. 50% of Paid Up Share Capital).
3. Details and Employment/Career History of the Proposed CEO, Senior Management, Secretary and Heads of Departments.
4. Good Corporate Governance Framework for Insurance & Reinsurance
5. Copy of the CEO’S Appointment Letter and his Acceptance Letter.
6. Copy of the CEO’S resignation of appointment in the former place of employment and the Acceptance of same.
7. A Declaration by the CEO/Director that the business shall be transacted in accordance with Sound Insurance Principles.
8. A Sworn Affidavit by each Director, Manager and Company Secretary that he/she is not disqualified under the Provisions of Section 12(1) of the Insurance Act 2003 from being a Director, Chief Executive, Manager or Company Secretary (details to be stated in the Affidavit) together with recent Passport Photographs.
9. Completed Personal History form of Directors and other Principal Officers
10. The class of insurance (whether General, Life, or Composite) with specimen documents of the following (where applicable):
    1. Proposal forms
    2. Policy documents
    3. Cover notes / Certificates
    4. Claims forms
    5. Table of premium rates and their basis
11. Evidence of adequate and valid reinsurance/retrocession arrangement of the Company.
12. Statement as to the method of distributing profits as between policyholders and shareholders in the case of life business (Where Applicable)
13. An Actuary statement or report as to the calculation of premium Rates and Non- forfeiture values (in case of life), terms and conditions to be offered and other related issues.
14. The reinsurance business intended to be transacted and sample of Cover Notes and/or contract wordings.

Stage 4: Registration Stage

1. Pre-Registration Interview
2. Publication of Applicant to Members of Public.
3. Notification of Success or Otherwise After 21 Days of Publication.
4. Issuance of Letter of Success
5. Evidence of Payment of Registration Fee
6. Issuance of Certificate Registration

To get your goal of setting up an Insurance business going, you might want to visit the nearest NAICOM office to you. According to information on its website, there are 5 offices of NAICOM;

1. Abuja (Head office) located at Plot 1239, Ladoke Akintola Boulevard, Gark II, Abuja (info@naicom.gov.ng)
2. Kano Zonal Office located at No 162, Farm Centre Road, Kano State
3. Port Harcourt Zonal Office located at No 23 Onne Road, G.R.A Phase 2 Via Airtel Office Port Harcourt, Rivers State
4. Lagos Office located at NIC Alagbon Street, Off Ikoyi Road, Victoria Island Lagos
5. Enugu Office located at C1 Presidential Road, P.O. Box 2304, Enugu, Enugu State

By, Nnamdi M.